21 October 2013

EBA publishes final draft TS on NPLs and forbearance reporting requirements; issues AQR recommendations

Final draft technical standards on Non-Performing Exposures and Forbearance

The standards on Non-Performing Exposures and Forbearance provide common definitions and reporting templates to allow supervisors to assess the level of forbearance activities and non-performing loans on a comparable basis across the EU.

More harmonised asset quality reviews, based on more comparable data, will help address uncertainties around EU banks' asset quality in the current context, and will support on-going and future monitoring of levels and changes in asset quality.

The proposed definitions of non-performing and forbearance exposures rely on the existing concepts of default and impairment but provide for specific harmonisation features. In particular, the definition of non performing exposures focuses on a 90-day past due threshold, while the definition of forbearance focuses on concessions extended to debtors who face, or may face, difficulties in meeting payments. Forborne exposures can be identified in both the non-performing and the performing portfolios.

Recommendations on AQRs

The EBA also issued recommendations to competent authorities for their existing and/or planned work on asset quality reviews (AQRs) across the European Union, including the work of the Single Supervisory Mechanism (SSM) and its balance sheet assessment. The aim of these recommendations is to contribute to a coordinated approach in the way competent authorities evaluate banks' credit portfolios.

In particular, for the purpose of the asset quality review, the EBA recommends competent authorities to apply, to the extent possible, the common definitions on "non-performing exposures" and "debt forbearance" published today.

Competent authorities should complete their respective AQRs by 31 October, 2014.

Full news

Recommendations

Final draft ITS

On 5.12.13, EBA will host a seminar on stress-testing in banks

© EBA